NODAL MINISTRY FOR ONLINE GAMING
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About
- The Union Ministry of Electronics and IT (MeitY) to publish rules and regulations for online gaming platforms.
- According to an official gazette, the Ministry is now the nodal ministry regulating online gaming.
- Recently a task force set up by the Ministry of Electronics and Information Technology has prepared a final report of its recommendations to regulate the online gaming industry in India.
- The task force report has proposed the creation of a central regulatory body for the gaming sector, clearly defining what games of skill and chance are, and bringing online gaming under the purview of the Prevention of Money Laundering Act, 2002, among other things.
Online Gaming Market in India
- A 2019 survey by the U.S.-based Limelight Networks found that India had the second-largest number of gamers after South Korea.
- The revenue of the Indian mobile gaming industry is expected to exceed $1.5 billion in 2022 and is estimated to reach $5 billion in 2025.
- The industry in the country grew at a CAGR of 38% between 2017-2020, as opposed to 8% in China and 10% in the US.
- It is expected to grow at a CAGR of 15% to reach Rs 153 billion in revenue by 2024. India’s percentage of new paying users (NPUs) in gaming has been the fastest growing in the world for two consecutive years, at 40% in 2020 and reaching 50% in 2021.
- According to a report by the Federation of Indian Chambers of Commerce & Industry (FICCI), transaction-based games’ revenues grew 26% in India, with the number of paying gamers increasing by 17% from 80 million in 2020 to 95 million in 2021.
- In India, there has been a rise in the gaming industry, as well as recognition by the government of the benefit of revenue by investing in the gaming industry leading to the development of draft guidelines for the regulation of games such as the “Online fantasy sports platforms” in India. There are also plans to set up a Center of Excellence for Gaming. However, how these guidelines and centres of excellence will have an impact on problematic Internet use needs to be examined further.
- Government policies restrict the timings children and adolescents indulge online, especially in gaming, for example, the “gamer guard” policy in Thailand, the “fatigue system” policy in China, and the “shut down” policy in South Korea.
- Harm reduction initiatives concerning Internet addiction involve displaying warning messages and restrictions on advertisements or gaming, regulation of product development, etc.
- There is also a need for multisectoral coordination – there should be the involvement of public health experts, behavioural addiction experts, and experts from the department of education, information, and technology to promote responsible Internet use.
- The setting up of a Central Level Regulatory Body as envisaged by the Task Force is a step in the right direction.
What is the need for a Central level Law?
- Failure of State Governments
- Online gaming so far has been a state subject, but state governments have said they find it extremely difficult to enforce certain rules like geo-blocking certain apps or websites within the territory of their state.
- Also, there is a concern that rules passed in one state are not applicable in another, which has caused inconsistency in how the online gaming industry is regulated in the country.
- State governments also do not have enough blocking powers like the Centre to issue blocking orders for offshore betting sites.
- Suicides
- Stakeholders have highlighted several societal concerns that can arise from the proliferation of online games in the country. There have been several reported incidents of people losing large sums of money on online games, leading to suicides in various parts of the country.
- Impact of gaming on health
- Research shows that gaming disorders can also be linked with anxiety, depression, obesity, sleeping disorders, and stress.
- People, who remain physically inactive for long periods because of gaming may also be at higher risk of obesity, sleep disorders, and other health-related issues.
- While time spent online is still not as high as in other countries, almost a quarter of adult Indian gamers had missed work while playing games during this pandemic.
- Gaming addictions cause physical, social and emotional damage, impairing sleep, appetites, careers and social lives.
- Lack of Regulatory Framework
- There is currently no regulatory framework to govern various aspects of online gaming companies such as having a grievance redressal mechanism, implementing player protection measures, protecting data and intellectual property rights, and prohibiting misleading advertisements.
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Recommendations of the task force
- Central-level law for online gaming
- According to the Task Force’s Report, a central-level law for online gaming should apply to real money and free games of skill, including e-sports, online fantasy sports contests, and card games among others.
- Casual games with no real money element in the form of stakes may be kept outside the scope of such rules, unless they have a high number of users in India, or permit the publication or transmission of information like any inappropriate content like violence, nudity, addictive content or misleading content.
- The regulatory body for the online gaming industry
- It has also recommended creating a regulatory body for the online gaming industry, which will determine what qualifies as a game of skill or chance, and accordingly certify different gaming formats, seek compliance and enforcement.
- The three-tier dispute resolution mechanism
- A three-tier dispute resolution mechanism, similar to that prescribed under the Information Technology Rules, 2021 for online streaming services, consisting of a grievance redressal system at the gaming platform level, a self-regulatory body of the industry, and an oversight committee led by the government should be put in place for online gaming.
- ‘Reporting Entities’ under the Prevention of Money Laundering Act, 2002,
- Any online gaming platform – domestic or foreign– offering real money online games to Indian users will need to be a legal entity incorporated under Indian law. These platforms will also be treated as ‘reporting entities’ under the Prevention of Money Laundering Act, 2002, and will be required to report suspicious transactions to the Financial Intelligence Unit-India.
Which ministry will be in charge of the regulation?
- The task force has suggested that the Ministry of Electronics and Information Technology (MeitY) may act as the nodal ministry to regulate online gaming, except for the e-sports category on which the Department of Sports can take the lead.
- The scope of the regulation by MeitY should only cover online gaming, that is, games of skill, and the issues of online betting and gambling being games of chance in nature should be excluded from its scope.
- Certain other aspects of online gaming such as advertisements, code of ethics relating to content classifications etc. could be regulated by the Information and Broadcasting Ministry, while the Consumer Affairs Ministry can regulate the sector for unfair trade practices.
What did the task force say about offshore betting apps?
- On the aspect of prohibiting games of chance, gambling websites or apps being played online, the proposed Digital India Act can include it in the list of prohibited user harms that will not be permitted, the task force has said.
- Many offshore betting and gambling websites which are illegal in India have become popular among Indian users. Despite being based outside India, some of these websites are widely advertised in Indian newspapers and TV channels, and allow users to transact in Indian rupees through popular digital payment modes such as internet banking, UPI and popular wallets,” the task force is learnt to have said in its report.
Way Ahead
- Many countries — including Australia, China, Japan, India, Italy, Japan, Korea and Taiwan— already officially recognize tech addiction as a disorder, some even going so far as to declare the issue a public health crisis, leading governments and healthcare providers to develop a series of major initiatives to curb the problem. India needs to take a cue from them.
- The live streaming of unauthorized video games was banned in China, signalling stricter enforcement of rules as part of its broad crackdown on the gaming industry aimed at purging content the government does not approve of.
- Awareness needs to be generated among the youth and their parents about internet addiction and educate them about the use of the internet in a responsible manner.
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